Which of the Following Statements Is False

question 255

Multiple Choice

Which of the following statements is false?

• A) By extending credit, a firm typically increases its cash flow through increased gross profits.
• B) A cash discount is typically intended to be an incentive to pay early.
• C) All else the same, firms with higher markups will tend to have more flexible credit terms.
• D) Whenever credit is extended to a new customer who would not otherwise pay cash, the amount the seller has at risk is the price the customer pays.
• E) The carrying costs associated with granting credit will increase as credit policies are relaxed.

---

Definitions:

Foreign Ownership

The situation where companies or assets are owned by investors or entities based outside the country in which the companies operate or the assets are located.

Net Inflow

The difference between the amount of money or resources entering and leaving a system or economy over a specific period.

Bretton Woods System

A monetary management system that established the rules for commercial and financial relations among the world's major industrial states in the mid-20th century.

Gold Standard

A monetary system where a country's currency or paper money has a value directly linked to gold.